Manufacturing lobby wary of Obama embrace

National Assn. of Manufacturers says recovery can’t be taken for granted

By

MaggieMcNeil

WASHINGTON (MarketWatch) — President Barack Obama has been loudly extolling the importance of a reinvigorated manufacturing sector to a healthy U.S. economy in recent weeks, and top officials at the nation’s largest lobbying group for the industrial sector hope he means what he says.

“The United States often approaches manufacturing policy in a haphazard way,” National Association of Manufacturers President Jay Timmons says. “Those practices must end.”

Jay Timmons, president of the National Association of Manufacturers

“We’re excited that people are talking about the manufacturing sector,” said Aric Newhouse, chief lobbyist for NAM in a recent interview. “But we hope that some of the regulatory policies coming out (of the White House) will reflect this.”

The entry for decades for millions of families into the middle-class with its solid wages, America’s manufacturing sector has been on the decline for more than forty years. More than a third of this country’s workers worked in factories following World War II, and in 1970, one in four jobs was manufacturing; now the sector employs fewer than 12 million, or less than 10% of the nation’s total workforce.

Manufacturers were hit especially hard by the recession. Of the almost 9 million jobs estimated to have been lost during the recession, two million of those were from manufacturing.

And that was on top of what had already been a disastrous decade for the sector when millions of American manufacturing jobs were lost due to an explosive growth in China’s industrial sector.

The travails of the sector have come to the attention of the White House, and President Obama has repeatedly — in high-profile stops this month in the politically important states of Ohio, North Carolina, Pennsylvania, and most recently in Iowa — preached the benefits of revitalizing the manufacturing industry in his administration’s efforts to boost the economy.

Reuters

On the line at the Chrysler Jefferson North auto plant in Detroit, Michigan April 28, 2011.

“If we want a robust growing economy, we need a robust manufacturing sector,” Obama said in a recent speech at Carnegie Mellon University, where he announced a new $500 million national effort to promote investment from the government, universities and the industry into cutting-edge manufacturing technologies.

“I know these have been tough years for American manufacturing, and all the workers and families who’ve built their lives around it … But I’m hopeful for the future,” said the president.

NAM says: Walk the walk

NAM welcomes the attention, and hopes it can turn into policies and regulations that are favorable for the industry.

Manufacturers have seen a pickup since the end of the recession, and factories have gained back over 240,000 jobs in the last year and a half. Because manufacturing jobs pay better than average, the comeback in jobs has been key to the broad economy, with estimates that almost a fifth of the gain in total wages and salaries during the recovery has come from manufacturing.

“The manufacturing industry is proud to be leading this U.S. economic recovery,” said NAM’s Timmons. But Timmons warns that “we cannot take these improvements for granted,” and his group is pushing for a host of policy objectives to support the sector.

The 11,000-member organization employs more than 140 policy and industry experts in its Washington headquarters and nine regional offices across the country. It spent almost $9 million lobbying Congress in 2010, according to OpenSecrets.org. NAM has been the second-biggest lobbyist in the manufacturing sector for more than a decade, behind only the behemoth corporate lobbyist General Electric
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.

Specifically on taxes, NAM wants the corporate tax rate to be lowered to 25% or lower from 35%, wants lower individual tax rates to be made permanent, urges a territorial tax system for U.S. multinationals to reduce taxes on foreign-made profit, and is calling for a “strengthened, permanent” research-and-development tax credit.

Aric Newhouse, chief lobbyist for the National Association of Manufacturers

Decrying what it calls “regulatory burdens that are counter-productive or force businesses to close,” NAM calls for a comprehensive review of business regulations and the cost of compliance, and suggests a new Congressional office devoted to regulatory analysis. It is strongly against proposals by the Environmental Protection Agency to tighten greenhouse gas regulations, saying the new rules could cause the loss of 7.3 million jobs by 2020 and add $1 trillion in new regulatory costs.

The manufacturing group favors “a progressive trade policy,” that promotes bilateral and regional trade agreements and lowers trade tariffs. It urges Congress to approve the long-stalled trade agreements with Colombia, South Korea and Panama, which on Tuesday appeared to have cleared a significant hurdle. See our story on the breakthrough.

But the future of the American manufacturing sector ultimately depends on having a skilled workforce, says the group. A key concern for the U.S. industry has been that almost 3 million manufacturing employees are 55 and older, and will begin retiring in the next decade. Replacing those workers will be a tough challenge.

To that end, NAM’s National Manufacturers’ Institute launched a certification program to community college students to provide 500,000 skilled workers to the industry within the next five years. The program got a major boost earlier this month by President Obama who heartily endorsed it.

Obama’s high-profile support for the manufacturing sector, however, has not always drawn warm comments from company executives. At a meeting earlier this month in Washington, manufacturing executives reportedly chastised White House Chief of Staff William Daley for inaction on trade deals and continued tight regulations.

“There’s a long list of challenges facing our industry,” says NAM lobbyist Newhouse, “So there’s a whole bunch of pieces that go into making the U.S. the leading place for manufacturing.”

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